Slack Takes a Post-Earnings Hit But Analysts See It as a Buy

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Shares of Slack Technologies (WORK) - Get Report continued to take a hit on Friday after the taking guidance for so-called calculated billings off the table, though analysts generally opted to look past the negatives.

The San Francisco company posted revenue of $201.7 million, up 50% year over year, and a non-GAAP per-share loss of 2 cents. Analysts polled by FactSet were expecting sales of $188.5 million and a non-GAAP per-share loss of 6 cents.

The mixed results prompted mixed reviews from several analysts on Friday, each with their own take on the both the numbers and the company’s future prospects, though the sentiment was generally more positive than negative.

The results were good, “but not nearly enough,” Mizuho analyst Gregg Moskowitz wrote in a note to clients, keeping his neutral rating on the stock with a $29 one-year price target.

Wedbush analyst Dan Ives had a similarly cautious view, noting that while the company delivered solid first-quarter results it will have “significant difficulty further penetrating the core enterprise market,” specifically Microsoft's  (MSFT) - Get Microsoft Corporation (MSFT) Report Teams product.

Slack (2)

"While Slack has done a commendable job getting to this juncture we believe the next step of growth will be more of an uphill battle as the Street could be overestimating growth in FY21 and beyond baked into shares at current levels," Ives said, holding his underperform rating on the stock though raising his price target to $20 from $14.

Barclays analyst Raimo Lenschow had a different interpretation, however, telling clients that Slack should continue to benefit from the pandemic-driven work-from-home movement over the next few years.

Meantime, analysts at both Piper Sandler and Cannaccord Genuity raised their price targets on what they expect to be positive longer-term momentum for the company. 

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